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Noetzel v. Hawaii Medical Service Association

United States District Court, D. Hawaii

July 27, 2016





         Elizabeth Noetzel seeks reconsideration of the order this court entered on April 27, 2016, denying Noetzel’s Motion to Remand. Noetzel asserts but does not establish manifest error of law or fact in that order. Accordingly, the court denies the reconsideration motion.


         Pursuant to an ERISA plan, Hawaii Medical Service Association provided Noetzel with medical insurance coverage for injuries she had suffered in a motor vehicle accident. See ECF No. 1-2, PageID #s 12-13.

         Noetzel filed a motor vehicle tort action in Hawaii state court, then entered into a confidential settlement agreement with the defendants in that case. See id., PageID # 13.

         Upon learning of the settlement, HMSA notified Noetzel of its intent to seek reimbursement from the settlement for the health benefits provided to her, pursuant to the reimbursement terms of its plan. See id., PageID #s 13-14. According to the plan’s “Guide to Benefits, ” HMSA

shall have a right to be reimbursed for any benefits we provide, from any recovery received from or on behalf of any third party or other source of recovery in connection with the injury or illness, including, but not limited to, proceeds from any:
Settlement, judgment, or award;
We shall have a first lien on such recovery proceeds, up to the amount of total benefits we pay or have paid related to the injury or illness. You must reimburse us for any benefits paid, even if the recovery proceeds obtained (by settlement, judgment, award, insurance proceeds, or other payment):
Do not specifically include medical expenses; Are stated to be for general damages only; Are for less than the actual loss or alleged loss suffered by you due to the injury or illness; Are obtained on your behalf by any person or entity, including your estate, legal representative, parent, or attorney; Are without any admission of liability, fault, or causation by the third party or payor.
Our lien will attach to and follow such recovery proceeds even if you distribute or allow the proceeds to be distributed to another person or entity. Our lien may be filed with the court, any third party or other source of recovery money, or any entity or person receiving payment regarding the illness or injury.

ECF No. 10-2, PageID # 158.

         On July 2, 2015, Noetzel filed a Petition for Determination of Validity of Claim of Lien of HMSA in state court. See ECF No. 1-2. The Petition sought a determination by the state court, pursuant to Haw. Rev. Stat. §§ 431:13-1-3(a)(10) and 663-10, that HMSA was not entitled to reimbursement from the settlement proceeds because HMSA’s lien sought “reimbursement from settlement funds that do not correspond to special damages recovered in the subject settlement.” See id., PageID # 15. Noetzel notes that Haw. Rev. Stat. § 663-10 refers to recovery by an insurer like HMSA of benefits paid equivalent to the special, not general, damages in a settlement. See id., PageID # 14.

         HMSA removed the action to federal court on August 7, 2015, asserting that this court has original jurisdiction over this matter pursuant to 28 U.S.C. § 1331, because Noetzel’s state law claims are “completely preempted” by § 502(a) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132(a). See ECF No. 1, PageID #s 3-4.

         In response, Noetzel filed a Motion to Remand on August 24, 2015, arguing that her state court action implicated only state law, was not completely preempted by ERISA, and was therefore not a matter over which this court had federal subject matter jurisdiction. See ECF No. 6.

         On January 28, 2016, the Magistrate Judge issued his Findings and Recommendation to Grant Elizabeth Noetzel’s Motion to Remand. See ECF No. 16, PageID # 236. The F & R recommended remanding this action on the ground that, under the two-part test set forth by the United States Supreme Court in Aetna Health Inc. v. Davila, 542 U.S. 200, 210 (2004), Noetzel’s action was not completely preempted by ERISA § 502(a). See id., PageID #s 238-43.

         On April 27, 2016, this court rejected the Magistrate Judge’s F & R and denied Noetzel’s Motion to Remand, determining that Noetzel’s claim was indeed “completely preempted” by ERISA § 502(a). See ECF No. 23.


         The remand order is an interlocutory order governed by Local Rule 60.1. Under Local Rule 60.1, a reconsideration motion may be based on “(a) Discovery of new material facts not previously available; (b) Intervening change in law; and (c) Manifest error of law or fact.” A “manifest error” is “[a]n error that is plain and indisputable, and that amounts to a complete disregard of the controlling law or the credible evidence in the record.” Black’s Law Dictionary 660 (10th ed. 2014).

         “Mere disagreement with a previous order is an insufficient basis for reconsideration.” White v. Sabatino, 424 F.Supp.2d 1271, 1274 (D. Haw. 2006). “Whether or not to grant reconsideration is committed to the sound discretion of the court.” Id. (internal quotation marks omitted).

         IV. ANALYSIS.

         A. Noetzel Is Not Entitled to Reconsideration Regarding the Court’s Determination that the First Prong of Davila Was Met.

         Under the two-pronged test for complete preemption set forth by the United States Supreme Court in Aetna Health Inc. v. Davila, 542 U.S. 200, 214 (2004), a claim is completely preempted if, first, “an individual, at some point in time, could have brought his claim under ERISA § 502(a), ” and, second, “there is no other independent legal duty that is implicated by a defendant’s actions.” 542 U.S. at 214. In the order denying the remand motion, this court determined that, because both prongs of the Davila test were met, Noetzel’s claim was “completely preempted” by ERISA § 502(a). See ECF No. 23.

         Noetzel seeks reconsideration of the denial of her Motion to Remand by rehashing her earlier arguments. Those arguments are no more persuasive now than they were earlier.

         With regard to the first Davila prong, Noetzel insists that her claim could not have been brought under ERISA § 502(a) because it does not implicate ERISA or an ERISA plan. See ECF No. 25-1, PageID #s 514-18. According to Noetzel, her claim does not implicate ERISA because Noetzel never alleges that an ERISA plan is involved. See id., PageID # 510 (“In the Hawai’i State Court reimbursement determination Petition, Noetzel never raised or referenced any term of the HMSA plan, nor did she raise the issue that certain terms of the HMSA plan were void under Hawai’i law.”).

         This argument conflicts with Davila, which instructed courts not to accept claims at face value, but to examine the essence of claims in determining whether they are completely preempted by ERISA § 502(a). 542 U.S. at 214 (“[D]istinguishing between pre-empted and non-pre-empted claims based on the particular label affixed to them would elevate form over substance and allow parties to evade the pre-emptive scope of ERISA simply by relabeling their contract claims as [state law] claims.”). As the Ninth Circuit has noted, “Complete preemption removal is an exception to the otherwise applicable rule that a ‘plaintiff is ordinarily entitled to remain in state court so long as its complaint does not, on its face, affirmatively allege a federal claim.’” Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941, 945 (9th Cir. 2009) (quoting Pascack Valley Hosp. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393, 398 (3d Cir. 2004)). “This is so because ...

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